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Brazilian Government denies any intention to nationalize mineral deposits

SAO PAULO, July 4, 2012 /CNW/ – The Brazilian government has no plans to intervene directly in the mining sector via a state company or to nationalize mineral deposits that might be deemed strategic to national interest, a senior government official in an exclusive interview published Wednesday by Brasil Mineral, the country’s leading trade magazine for the sector.

“We want to make it very clear that the Brazilian Geological Survey (CPRM) will not begin to prospect for or mine minerals as if it were a state-owned company,” said Claudio Scliar, geology, mining and mineral processing secretary at the Mines and Energy Ministry, rebutting recent press reports. “We have never considered nationalizing the sector, in the sense of creating (state-owned) companies.”

What the government is looking at, Scliar said, is changing the existing system in ways that would facilitate the operations of companies wanting to invest in mineral production. The government will seek to move from the existing system, under which mineral rights in a specific area are awarded to whoever registers the claim first, to a system whereby interested companies will need to bid for areas at an auction to be conducted by a planned regulatory agency.

Scliar said that the new rules would apply to all minerals with the exception of those destined for civil construction. These rights will continue to be awarded, and the responsibility for awarding production licenses may be delegated by the federal government to other levels of government.

Until the government’s new proposal is approved there will be a transition phase during which mineral rights will continue to be issued in the current manner, but only after much more rigorous analysis. “We will not simply carry on stamping and signing (requests),” Scliar said.

Companies that depend on mineral rights to continue existing projects have absolutely no cause to worry, he said: “The last thing the government plans doing is getting in the way of companies that want to produce. But speculation in mineral areas will no longer be tolerated; we want to do away with the culture of trading in mineral rights, and indeed we see this as a way of encouraging investment.”

There is currently an average delay of 10 years from the granting of prospecting rights to a request for production rights, he said.

Scliar said that under the government’s proposals, the question of strategic minerals – principally metallic minerals – would be addressed by a yet-to-be-created National Minerals Policy Council (CNPM).

The Brazil-Canada Chamber of Commerce is following those issues very closely and we are in regular contact with the Brazilian government. The BCCC would also like to congratulate the Ministry of Mining and Energy for its quick response to the matter.